Budgeting and forecasting have many challenges, but one that I don't think gets enough attention is aligning the organisation about what makes a successful year.
Which approach you take doesn't matter, as long as everyone in the organisation understands what's going on.
I've worked in businesses where hitting 100% of a target barely warrants a mention, as it's the expected baseline. I also worked in a business where when we hit 80% there were substantial bonuses and a party.
And I had felt pretty bad about my performance until those were announced.
I'm being deliberately vague about what sort of targets; of course, parties are often about revenue targets, but success can and should be against any sort of target.
Anyway, these different approaches to targets can cause you massive problems in your budgeting and forecasting processes. If some parts of the business assume that they are expected to at minimum hit 100%, they'll plan that way, while another part of the organisation is used to having stretch goals and will plan with the expectation of hitting 80% of the numbers they give you.
Whichever way you decide is fine. In my humble opinion, I think most people's psychology reacts better to a 100% minimum and a party at 120%, but I can see the logic either side.
Just make sure that everyone is working off the same basis, or your variances will be all over the place.
